Greening Greece

Exporting Germany’s Energy Makeover

epa05398847 German Economy Minister Sigmar Gabriel (C) leaves Maximos Mansion after his meeting with Greek Prime Minister Alexis Tsipras in Athens, Greece, 30 June 2016. Gabriel is in Athens on a two-day visit. EPA/ORESTIS PANAGIOTOU +++(c) dpa - Bildfunk+++
German Economics Minister Sigmar Gabriel in Athens on Thursday.
  • Why it matters

    Why it matters

    Climate change is prompting many countries to tap green energy alternatives and Germany, with its extensive and expensive energy transition, is leading the way.

  • Facts

    Facts

    • German Economics Minister Sigmar Gabriel is on a two-day trip visit to Greece, starting on Thursday.
    • Germany’s energy transition has so far cost an estimated €100 billion ($111.7 billion).
    • Other countries are imitating some of Germany’s efforts, and benefiting from expensive German research and development.
  • Audio

    Audio

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Greece is a country with strong renewable credentials, not least its strong sunshine and plenty of wind. Now moves are afoot to make the most of these natural resources.

During his two-day trip to the country, German Economics Minister Sigmar Gabriel intends to underscore how green energy sources could boost the country’s troubled economy.

“There is already good cooperation, but this will be intensified and expanded,” the German economics ministry said in a press statement ahead of the trip. “This is about future investment in Greece and sending a signal to the European renewables sector.”

Mr. Gabriel’s 40-strong delegation includes a number of representatives of the green-energy sector. During his trip, Mr. Gabriel is meeting with Greek Prime Minister Alexis Tsipras and senior officials. Renewables are high on the agenda, alongside trade links. But adverse investment conditions are preventing deals from moving forward.

“Companies want to invest in Greece, but we have to talk about the conditions,” Mr. Gabriel said during his meeting with Mr. Tsipras on Thursday.

Tilos, which is not linked to the electricity grid, is viewed as a prototype for other potential “green islands”.

Members of Mr. Gabriel’s delegation complain that business in Greece is still hampered by corruption and a lack of transparency. Oftentimes, it doesn’t feel like a European country, one investor told Handelsblatt on condition of anonymity.

Though Greece has many programs to support the expansion of renewable energy, businesses don’t have confidence in the government’s ability to make good on its promises and pay, another member of the German delegation told Handelsblatt.

The privatization of the port of Piraeus is the latest example of the unpredictable investment climate in Greece. State-owned Chinese logistics company Cosco struck a deal with Greek authorities, in the presence of Mr. Tsipras, to gradually acquire a 67-percent stake in the port for €370 million. Cosco agreed to invest an additional €350 million in the port over the next three years.

As parliament moved to ratify the concession on Thursday, however, important passages were changed to Cosco’s disadvantage. Minster of Shipping Thodoris Dritsas, who belongs the far-left faction of the governing party Syriza, was apparently behind the changes.

Cosco said the changes made in parliament were “a complete reverse of what was agreed” and called on the government to stick to what was originally signed in the presence of the prime minister. The Chinese company’s difficulties could deter other businesses, including members of Mr. Gabriel’s delegation, from making investments in Greece.

But the country does have tremendous potential. One example can be found in the small, often overlooked island of Tilos, tucked between Rhodes and Kos in the Dodecanese cluster of islands. The island is set to cover some 80 percent of its energy requirements with renewable sources.

The energy transition underway on the 500-population island of Tilos is supported by the European Union, as part of its Horizon 2020 research program. Taking part in the project are experts from the Piraeus University, as well as 15 firms and institutions from across Europe.

The consortium includes the companies Eunice, Flamm, SMA, Eurosol, and the Berlin-based Younicos, which develops batteries to store renewable power.

Tilos, which is not linked to the national electricity grid, is viewed as a prototype for other potential “green islands.”

“Right now Tilos is the most innovative of the European Union’s energy projects,” said Nikos Mantazaris from the Greek section of the World Wildlife Fund, or WWF.

Its green makeover will involve wind power as well as solar panels with a future capacity of around one megawatt. Key to the project is also a battery storage system, which will ensure the island’s access to power, even on windless nights.

Its green power system is scheduled to become operational in the spring of 2017. It is predicted to generate excess energy, allowing it to become an exporter to its neighboring island Kos.

The goal of the renewable roll-out is to make the island, and potentially others too, energy self-sufficient, with small traditional fossil fuel power stations operating only as a last resort.

This, it is hoped, could usher in new business for the German renewable companies. Younicos, for example, can demonstrate its ability to store electricity on the island and then use it to attract new overseas business.

And Greece’s potential is enormous. From around 200 islands, 36 are not hooked up to the national electricity grid. They obtain energy from climate-damaging diesel generators, financed to the tune of €700 million, or $778 million, every year.

There is already a gradual trend afoot to maximize the islands’ use of its wealth of renewable sources, but that, Mr. Gabriel and his team hope, should be accelerated in the future.

 

Gerd Höhler is a Handelsblatt correspondent based in Athens, Greece. Klaus Stratmann is the deputy bureau chief of Handelsblatt in Berlin and covers the energy market. To contact the authors: stratmann@handelsblatt.com, hoehler@handelsblatt.com

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